Sears to unload stores to raise cash

CHICAGO - Sears Holdings Corp. said it plans to spin off its small-format hometown dealer stores and outlets and sell 11 stores to raise cash and shore up its money-losing retail business.

The long-suffering retailer, controlled by hedge-fund investor Edward Lampert, said it expects the steps to raise up to $770 million. The offering to separate the more than 1,000 hometown and outlet stores should raise $400 million to $500 million, the company said.

Hometown stores are small hardware stores, usually operated by independent dealers. Sears plans to sell the 11 mall stores -- including the store at Apache Mall in Rochester, Minn. -- to Chicago-based General Growth Properties Inc.

The decision comes as Sears swung to a loss of $2.4 billion for the fourth quarter on a 4 percent fall in revenue to $12.48 billion.

"Our fourth-quarter earnings were unacceptable," said Lou D'Ambrosio, CEO and president, in a conference call Thursday morning. "We know that and are taking immediate actions to address it."

Sears took the unusual step of hosting an earnings conference call, something the retailer hasn't done since billionaire Lampert took over the company in 2005, in an effort to squash investor concerns that the company could be running out of money.

Sears shares had plummeted below $30 in January when word spread that CIT Group Inc., a key lender in the retail industry, would no longer provide loans to suppliers shipping goods to Sears and Kmart. CIT's decision came on the heels of Sears' disappointing holiday sales drop, a string of quarterly losses, rising debt, dwindling cash, store closings and downgrades from the major credit agencies deeper into junk territory.

D'Ambrosio, a technology executive hired a year ago to turn around the ailing retailer, added that more cost cuts are underway. Last week, Sears said it would lay off 100 workers at its Hoffman Estates, Ill., headquarters. And in late December it announced plans to shutter up to 120 unprofitable stores. Sears has so far named 81 stores specifically for closing.

Investors have long anticipated that Lampert would sell off portions of Sears, in particular its real estate, to raise money. Some experts predict Sears will eventually become an e-commerce retailer with fewer, smaller storefronts.